REG - Cizzle Biotechnology - Results for the year ended 31 December 2022
27/04/2023 07:00
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RNS Number : 6087X Cizzle Biotechnology Holdings PLC 27 April 2023
27 April 2023
Cizzle Biotechnology Holdings Plc
("Cizzle Biotechnology", "Cizzle", the "Company" or the "Group")
Results for the year ended 31 December 2022
Cizzle Biotechnology, the UK-based diagnostics developer, is pleased to
announce its audited results for the year ended 31 December 2022.
Chair's Statement
The Group has continued throughout 2022 in developing a blood test for the
early detection of lung cancer. Its proof-of-concept protype test is based on
the ability to measure a stable blood plasma biomarker, a variant of CIZ1.
CIZ1 is a naturally occurring cell nuclear protein involved in DNA
replication, and the targeted CIZ1B variant is highly correlated with
early-stage lung cancer.
Published research led by Professor Coverley previously demonstrated that
CIZ1B can be measured with high sensitivity via an ELISA process, which should
allow for testing in a high-throughput, hospital-friendly format. The
Directors believe that this development overcomes an important barrier to
further clinical development and the application of this blood test for the
early detection of lung cancer, which is essential to improve a patient's
chance of survival.
In addition to implementing a strategy to develop a regulatory approved
commercial, diagnostic laboratory immunoassay for early-stage lung cancer, the
Group has broadened its interests to include the detection of a range of other
early-stage cancers. It has also expanded its potential customer base to
include the pharmaceutical industry through a contract to develop a diagnostic
test that can help in the development of personalised medicines, so called
"companion diagnostics", and has secured royalty bearing rights to the sale of
such medicines in the longer term.
The Board intends for the Group's initial product to be a diagnostic
immunoassay that can be readily performed by hospitals and reference
laboratories, but a potential follow-on product could be a point of care test
provided by a primary health care provider.
Research and Development
Throughout 2022, the Company continued to work with external expert partners
and suppliers to develop and supply of proprietary key monoclonal antibodies
and other detector proteins for its assay platform, and in July 2022 the
Company provided an update on the progress of this work. A key milestone was
the characterisation of a mouse monoclonal antibody that specifically detects
CIZ1B. Assay conditions for its use are being optimised, as well as further
work to broaden access to other antibodies that can be used in its
proprietary early lung cancer tests, and potentially for a range of other
early-stage cancers.
On 11 April 2022 a new 12 month research agreement was signed with the
University of York, a member of the Russell Group of research-intensive
universities and one of the world's premier institutions for inspirational and
life-changing research, for the development of potential applications in
cancer diagnosis and therapy. The agreement, commenced on 25 June 2022 for a
period of 12 months, following the successful previous programme announced on
17 September 2021 for the development and validation of molecular tools with
potential application in cancer diagnosis or therapy, and their configuration
into assays for Cizzle's proprietary cancer biomarker variants. On 24 April
2023, the Company announced that this research programme had met some critical
milestones, especially in optimising the platform and antibodies required to
scale up and bring to market our diagnostic tests for earlystage cancer
detection. As such a further new agreement has been signed with the University
lasting until 25 September 2024. This programme will continue development of
its CIZ 1B biomarker technology for early-stage cancer diagnosis and with
potential applications in cancer therapy. This includes the evaluation of the
biomarker for detecting a range of other cancers in addition to the existing
assay for early lung cancer detection.
As in previous agreements, Cizzle Biotechnology will own all intellectual
property rights arising from the work which strengthens the Company's position
in creating new solutions for early cancer diagnostics and therapeutic tools.
Development of new future revenue stream
On 14 February 2022 the Group announced a royalty acquisition agreement with
Conduit and SGSC to acquire a 5% economic interest in the commercialisation of
the AZD1656 asset or such other assets being developed by Conduit or SGSC to
treat inflammatory pulmonary and cardiovascular disease, for a total
consideration of £1.88m. The initial consideration of £1m was settled
through the issue of 25,000,000 new ordinary shares at a price of 4.0p per
share, with the remaining consideration of £0.88m settled in September 2022
through the issue of 22,000,000 new ordinary shares at 4.0p per share. Prior
to this, in September 2021, the Group entered into a royalty sharing agreement
with SGSC to grant the Group potential royalty payments from the
commercialisation of SGSC's therapeutic asset AZD1656 of up to £5m, plus
potentially further payments from the use of a companion diagnostic.
In December 2022 the Company announced that it had agreed a put option to
sell: (i) its 5% economic interest in the commercialisation of the AZD 1656
asset to treat inflammatory pulmonary and cardiovascular disease (the
"Economic Interest"); and (ii) its royalty sharing agreement with St George
Street Capital ("SGSC"), the UK-based biomedical charity (the "Royalty Sharing
Agreement') to Conduit Pharmaceuticals Limited, a pharmaceutical company
established to fund the development of successful deprioritized clinical
assets licensed from large pharmaceutical companies ("Conduit") for a total
consideration of £3.25 million to be satisfied through the issuance of new
shares in Conduit (the "Option").
On 9 November 2022, it was announced that Conduit entered into a definitive
business combination agreement with Murphy Canyon Acquisition Corp.
(NASDAQ:MURF) ("Murphy"), a blank-check special purpose acquisition company.
The combined company's common stock is anticipated to be listed on NASDAQ
under the ticker symbol "CDT". The combined company is anticipated to have an
estimated pro forma enterprise valuation of approximately $700.49 million with
cash proceeds from the transactions expected to be the balance of $136.04
million of cash held in Murphy's trust account less any redemptions by
Murphy's public stockholders and the payment of certain expenses, and
approximately $27.00 million attributable to a private investment anchored by
new and existing investors of Conduit (the "PIPE Investment").
The Economic Interest and Royalty Sharing Agreements are valued at cost,
totalling £2,080,000, as at 31 December 2022. No profits or revenues were
attributable to the assets subject to the Option. The Option is exercisable
solely at the discretion of Cizzle and Cizzle has agreed to pay Conduit
£120,000 in cash as the premium for the Option, which has a nine-month term.
Reaching Global Markets
During 2022 the Company extended its global reach of the Group's technology to
both China and the USA, where there is much need for the use of the early
detection of lung cancer tests:
• China On 1 February 2022 a full commercial agreement with International
Co-Innovation Center for Advanced Medical Technology ("iCCAMT") and Shenzen
Intelliphecy Life Technologies Co. Ltd was executed to develop and market
early lung cancer diagnostic tests in China. This agreement will generate
future revenues for the Group via a 10% royalty on the sales of all products
and services using its proprietary CIZ1B technology and from payment for
monoclonal antibodies and reagents.
• USA On 6 May 2022 the Group announced that it had signed a heads of terms to
partner with CorePath Laboratories ("CorePath"), a full service cancer
reference laboratory, to develop and offer its proprietary early-stage lung
cancer test throughout the USA. The proposal is that the Group would receive a
15% royalty and royalty sharing arrangements on the direct offering of
products and services using CIZ1B via CorePath in the USA. On 16 June 2022 a
marketing agreement was signed with Behnke Group, USA, to promote, identify
and facilitate partnerships for Cizzle with healthcare providers and
businesses in the USA.
Funding
In September 2022 the Company completed a fund raising providing gross
proceeds of £500,000 by way of a subscription for its shares and secured a
£500,000 facility to draw down on further funds for a term of 18 months, if
required. The funds will be used to provide working capital for the Company
and to continue development of a laboratory-developed test ("LDT") accredited
service for the early detection of lung cancer and taking the Company's
proprietary CIZ1B biomarker blood test through to UKCA, CE marking and/or FDA
510(k) clearance.
In December 2022 the Company raised net proceeds, before expenses, of
£115,000 (gross proceeds: £118,000) to fund the purchase of an option (cost
£120,000) to sell its AZD1656 assets as explained above.
Financial overview
The financial results for the year ended 31 December 2022 are summarized
below:
- Corporate expenses, before share option charge and exceptional items:
£823,000 (2021: £552,000);
- Share option charge: £140,000 (2021: £299,000)
- Exceptional corporate expenses relating to the acquisition: £Nil (2021:
£3,107,000) which include transaction costs of £Nil (2021: £303,000) and a
non-cash share-based expense of £Nil (2021: £2,804,000) (explained in Notes
3 and 5);
- Total comprehensive loss: £912,000 (2021 Loss £3,921,000); and
- Loss per share 0.3 p (2021: Loss 2.4 p).
Allan Syms
Executive Chair
26 April 2023
Enquiries:
Cizzle Biotechnology Holdings plc Via IFC Advisory
Allan Syms (Executive Chairman)
Allenby Capital Limited +44(0) 20 33285656
John Depasquale
Alex Brearley
Novum Securities Limited +44(0) 20 7399 9400
Colin Rowbury
Jon Bellis
IFC Advisory Limited +44(0) 20 3934 6630
Tim Metcalfe
Florence Chandler
About the Company
Cizzle Biotechnology is developing a blood test for the early detection of
lung cancer. Cizzle Biotechnology is a spin- out from the University of York,
founded in 2006 around the work of Professor Coverley and colleagues. Its
proof-of-concept prototype test is based on the ability to detect a stable
plasma biomarker, a variant of CIZ1 known as CIZ1B. CIZ1 is a naturally
occurring cell nuclear protein involved in DNA replication, and the targeted
CIZ1B variant is highly correlated with early-stage lung cancer.
For more information please see https://cizzlebiotechnology.com
You can also follow the Company through its twitter account @CizzlePlc and on
LinkedIn.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Notes Group Group
Year ended 31 December Year ended 31 December
2022 2021
£'000 £'000
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses
- on-going administrative costs 6 (823) (552)
- share option charge 6 (140) (299)
- transaction costs 6 - (303)
- reverse acquisition expenses 6 - (2,804)
Total administrative expenses (963) (3,958)
Operating loss and loss before income tax (963) (3,958)
Income tax 9 51 37
Loss and total comprehensive income for the year (912) (3,921)
attributable to the equity shareholders of the parent
Earnings per ordinary share (pence) attributable to the equity shareholders:
Continued operations basic and diluted 10 (0.3p) (2.4p)
Earnings per ordinary share (pence) attributable to
the equity shareholders of the parent 10 (0.3p) (2.4p)
The Company has elected to take the exemption provided under section 408,
Companies Act 2006 from presenting the Company statement of comprehensive
income.
The notes are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2022
Notes Group Group
2022 2021
£'000 £'000
Non-current assets
Intangible asset 11 2,080 200
2,080 200
Current assets
Trade and other receivables 12 227 80
Cash and cash equivalents 13 478 875
705 955
Total assets 2,785 1,155
Equity
Capital and reserves attributable to equity holders of the Company
Ordinary shares 14 3,502 3,493
Share premium 34,917 32,566
Shares to be issued 115 -
Reverse acquisition reserve (40,021) (40,021)
Share capital reduction reserve 10,081 10,081
Share option reserve 199 335
Retained losses (6,153) (5,517)
Total equity 2,640 937
Liabilities
Current liabilities
Trade and other payables 15 145 218
Total liabilities 145 218
Total equity and liabilities 2,785 1,155
The notes are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the board
on 26 April 2023 and were signed on its behalf by:
Nigel Lee
Director
Company Statement of Financial Position
As at 31 December 2022
Notes 2022 2021
£'000 £'000
Non-current assets
Intangible asset 11 2,080 200
Investments 11 21,803 21,803
23,883 22,003
Current assets
Trade and other receivables 12 726 241
Cash and cash equivalents 13 464 848
1,190 1,089
Total assets 25,073 23,092
Equity
Capital and reserves attributable to equity holders of the company
Ordinary shares 14 3,502 3,493
Share premium 34,917 32,566
Share capital to be issued 115 -
Share capital reduction reserve 10,081 10,081
Share option reserve 199 335
Accumulated losses (23,867) (23,516)
Total equity 24,947 22,959
Liabilities
Current liabilities
Trade and other payables 15 126 133
Total liabilities 126 133
Total equity and liabilities 25,073 23,092
The notes are an integral part of these financial statements. The loss for the
year of the Company was £627,000 (2021: loss of £1,145,000).
The financial statements were approved and authorised for issue by the board
on 26 April 2023 and were signed on its behalf by:
Nigel Lee
Director
Consolidated Statement of Cash Flows for the year ended 31 December 2022
Notes Group Group
2022 2021
£'000 £'000
Cash flows from operating activities
(963) (3,958)
Operating (loss) before tax
Adjustment for: 3,6 - 2,804
Reverse acquisition expense
Share option charge 140 299
Transaction costs settled through share issue - 32
Share based adjustment/payment to former director 8 11
Operating cash flow before working capital movements (815) (812)
Decrease in trade and other receivables 12 16 7
Decrease in trade and other payables 15 (73) (204)
Net cash used in operating activities (872) (1,009)
Cash flows from investing activities
Cash acquired on acquisition of subsidiary 46
-
Purchase of investment in intangible assets 11 - (200)
Purchase of a Put Option 12 (120) -
Net cash used in investing activities (120) (154)
Cash flows from financing activities
Proceeds from the issue of ordinary shares (net of issue costs) 14 480 2,041
Proceeds from shares to be issued 115 -
Borrowings repaid - (10)
Net cash generated from financing activities 595 2,031
Net increase / (decrease) in cash and cash equivalents (397) 868
Cash and cash equivalents at the start of the year 13 875 7
Cash and cash equivalents at the end of the year 13 478 875
The notes are an integral part of these financial statements.
Company Statement of Cash Flows for the year ended 31 December 2022
Notes 2022 2021
£'000 £'000
Cash flows from operating activities
(627) (1,145)
Loss before tax
Share option charge 140 299
Transaction costs settled through share issue - 32
Operating cash flow before working capital movements (487) (814)
Change in trade and other receivables 12 10 (19)
Change in trade and other payables 15 (8) 75
Net cash used in operating activities (485) (758)
Cash flows from investing activities
Purchase of investment in intangible assets 11 - (200)
Purchase of Put Option 12 (120) -
Investment in subsidiary company 11 - (103)
Change in intra group funding (374) (216)
Net cash used in investing activities (494) (519)
Cash flows from financing activities
Proceeds from the issue of ordinary shares (net of issue costs) 14 480 2,041
Proceeds from shares to be issued 115 -
Net cash generated from financing activities 595 2,041
Net (decrease) /increase in cash and cash equivalents (384) 764
Cash and cash equivalents at the start of the year 13 848 84
Cash and cash equivalents at the end of the year 13 464 848
The notes are an integral part of these financial statements.
Group statement of Changes in Equity
for the year ended 31 December 2022
Group Ordinary Share Share Reverse Retained Total
Share Premium Option Acquisition Losses
Capital Reserve Reserve
Shares to be issued Capital
Redemption
Reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
£'000
At 1 January 2021 3 1,585 - - (1,596) (8)
- -
Issue of shares - 11 - - - 11
- -
Transfer to reverse acquisition reserve (3) (1,596) - 1,599 - -
- -
Recognition of plc equity at acquisition date 3,470 8,852 - (22,621) - (218)
- 10,081
Issue of shares for acquisition of subsidiary 21 21,679 - (21,803) - (103)
- -
Reverse acquisition expense - - - 2,804 - 2,804
- -
Issue of shares for cash 2 2,198 - - - 2,200
- -
Issue of shares in settlement of fees - 32 - - - 32
- -
Issue of warrants - (36) 36 - - -
- -
Cost of share issue - (159) - - - - (159)
-
Share option charge - - - 299 - - 299
-
3,493 32,566 335 (40,021) (1,596) 4,858
- 10,081
Comprehensive Loss for the year - - - - (3,921) (3,921)
- -
At 31 December 2021 3,493 32,566 335 (40,021) (5,517) 937
- 10,081
Issue of shares for acquisition of AZD 1656 intangible asset 5 1,875 - - - 1,880
- -
4 500 - - - 504
Issue of shares for cash
- -
Costs of share issue - (80) - - - (80)
- -
Share options exercised - 56 (276) - 276 56
- -
- - - - - 115
Shares to be issued 115 -
Share option charge - - 140 - - 140
- -
3,502 34,917 199 (40,021) (5,241) 3,552
115 10,081
Comprehensive Loss for the year - - - - (912) (912)
- -
At 31 December 2022 3,502 34,917 199 (40,021) (6,153) 2,640
115 10,081
The notes are an integral part of these financial statements.
Company statement of Changes in Equity
for the year ended 31 December 2022
Ordinary Share Share premium Shares to be issued Share capital reduction reserve Share option reserve Retained Losses Total
Capital £'000 £'000 £'000 £'000 £'000
£'000 £'000
At 1 January 2021 3,470 8,852 - (22,371) 32
- 10,081
Issue of shares for acquisition of subsidiary 21 21,679 - - 21,700
- -
Issue of shares for cash 2 2,198 - - 2,200
- -
Issue of shares in settlement of fees - 32 - - 32
- -
Cost of share issue - (159) - - - (159)
-
Issue of warrants - (36) 36 - -
- -
Share option charge - - - 299 - 299
-
3,493 32,566 335 (22,371) 24,104
- 10,081
Comprehensive Loss for the year - - - (1,145) (1,145)
-
At 31 December 2021 3,493 32,566 335 (23,516) 22,959
10,081
Issue of shares for acquisition of AZD 1656 intangible asset 5 1,875 - - 1,880
- -
Issue of shares cash (net of expenses) 4 500 - - 504
- -
Costs of share issue - (80) - - (80)
- -
Share options exercised - 56 (276) 276 56
- -
Shares to be issued - - - - 115
115 -
Share option charge for year - - 140 - 140
- -
3,502 34,917 199 (23,240) 25,574
115 10,081
Comprehensive Loss for the year - - - (627) (627)
- -
At 31 December 2021 3,502 34,917 199 (23,867) 24,947
115 10,081
The notes are an integral part of these financial statements.
Notes to the financial statements for the year ended 31 December 2022
1 General information
Cizzle Biotechnology Holdings PLC ("the Company" of "the Group") (formerly
Bould Opportunities PLC) is a public limited company with its shares traded on
the Standard Listing of the London Stock Exchange. On 14 May 2021 the Company
acquired through a share for share exchange the entire share capital of Cizzle
Biotechnology Limited. The Company is a holding company of a group of
companies ("the Group") whose principal activity is the early detection of
lung cancer via the development of an immunoassay test for the CIZ1B
biomarker.
The directors consider there to be no ultimate controlling shareholder of the
Company.
The address of the registered office is 6(th) Floor, 60 Gracechurch Street,
London, EC3V 0HR and the registered number of the Company is 06133765.
2 Accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The financial statements of Cizzle Biotechnology Holdings PLC ("the Company")
including subsidiary undertakings (together referred to as "the Group") have
been prepared in accordance with UK-adopted international accounting standards
and the Companies Act 2006 on a historical cost basis.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Company's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 5.
The results for the year ended 31 December 2022 are the Group results. The
results for the comparative period to 31 December 2021 are the results of the
Group following the acquisition of Cizzle Biotechnology Limited ("CBL") on
14 May 2021.
(a) New standards and interpretations
The IASB and IFRS Interpretations Committee have issued the following
standards and interpretations with an effective date of implementation of 1
January 2022.
i) New standards and amendments - applicable 1 January 2022
The following standard and interpretations apply for the first time to
financial reporting periods commencing on or after 1 January 2022:
Effective for accounting periods beginning on or after Impact
Proceeds before Intended Use - Amendments to IAS 16 "Property, Plant and 1 January 2022 None
Equipment"
Reference to the Conceptual Framework - Amendments to IFRS 3 "Business 1 January 2022 None
Combinations"
Onerous contracts and costs of fulfilling a contract - Amendments to IAS 37 - 1 January 2022 None
"Provisions, Contingent Liabilities and Contingent Assets"
ii) Forthcoming requirements
As at 31 December 2022, the following standards and interpretations had been
issued but were not mandatory for annual reporting periods ending on 31
December 2022 and not early adopted.
Effective for accounting periods beginning on or after Impact
Definition of accounting estimates - Amendments to IAS 8 "Changes in 1 January 2023 None
Accounting Estimates and Errors"
Disclosure of Accounting Policies - Amendments to IAS 1 "Presentation of 1 January 2023 None
Financial Statements" and IFRS Practice Statement 2
Deferred Tax relates to Assets and Liabilities arising from a Single 1 January 2023 None
Transaction - Amendments to IAS 12 "Income Taxes"
2.2 Going concern
The Directors have adopted the going concern basis in preparing the financial
statements for the year ended 31 December 2022. In reaching this conclusion,
the Directors have considered current trading and the current and projected
funding position for the period of just over 12 months from the date of
approval of the financial statements through to 30 April 2024. The Company, as
anticipated in the Company's Prospectus announced on 22 September 2022, will
need to raise additional funding should it wish to undertake development of
additional future products beyond the core offering that is mentioned in this
Prospectus and to further fund the corporate and operational overhead of the
business. The forecasts have been prepared using two scenarios - a realistic
one that assumes expected levels of income and a pessimistic one that assumes
a reduced level of income and delays in accelerated research and development
expenditure. Both forecasting scenarios show that the Group continues to be a
going concern.
Current funding
The Group's cash balance as at 31 December 2022 was £478,000 and there were
no borrowing facilities at that date. On 26 September 2022 the Company raised
£535,000, before share issue costs, through the placing of new ordinary
shares. Also a further facility of £500,000, which is available until 19
March 2024, was announced that is available to the Company, to provide further
funds at a fixed price of 1.8p per ordinary share. On 19 December 2022 the
Company raised £115,000, net of share issue costs, (gross proceeds:£118,000)
and the ordinary shares relating to this subscription were admitted to trading
on the London Stock Exchange in January 2023.
Conclusion
After taking account of the Company's current funding position, its cash flow
projections and the risks and uncertainties associated with these, the
directors have a reasonable expectation that the Company has access to
adequate resources to continue in operational existence for the foreseeable
future. For these reasons they continue to prepare the financial statements on
a going concern basis. These financial statements do not include any
adjustments that would result from the going concern basis of preparation
being inappropriate.
2.3 Segmental reporting
IFRS 8 requires that segmental information be disclosed on the basis of
information reported to the chief operating decision maker. The Company
considers that the role of chief operating decision maker is performed by the
Company's Board of Directors. The Group's only business activity and single
segment is the development of tests for the early detection of lung cancer.
2.4 Foreign currency translation
The functional currency of the Company is Sterling which is also the
presentational currency of the financial statements. Foreign currency assets
and liabilities are converted into Sterling at the rates of exchange ruling at
the end of the financial year. Foreign currency transactions are translated
into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end exchange
rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of comprehensive income.
2.5 Non-Current assets
Investments in intangible assets and subsidiaries are stated at cost less
accumulated impairment. Plant and equipment are stated at costs less
accumulated depreciation and any accumulated impairment losses. Depreciation
is charged to write off costs less estimated residual values on a
straight-line basis over their estimated useful lives. Estimated useful lives
are reviewed each year and amended if necessary. The Group's and Company's
investment in intangible assets ( currently AZD 1656) are considered to have
indefinite lives due to the infancy of the assets and the fact that they are
not yet revenue generating.
2.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short-term highly liquid investments, with original maturities
of three months or less.
2.7 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
2.8 Current and deferred income tax
Current income tax is calculated on the basis of the tax laws enacted or
substantively enacted at the statement of financial position date in the
countries where the Company's subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation and establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities. Research and
Development tax credits are accounted for on an accruals basis.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. However, deferred
income tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit nor
loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantively enacted by the statement of financial position
date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled. Deferred income
tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can
be utilised.
2.9 Share based payments
The Company operates an equity-settled, share-based compensation plan. The
fair value of the employee services received in exchange for the grant of the
options is recognised as an expense and credited to the share option reserve
within equity. The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options granted, excluding
the impact of any non-market vesting conditions (for example, profitability
and sales growth targets). Options that lapse before vesting are credited back
to income. The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and, if applicable, share
premium when the options are exercised.
2.10 Financial instruments
i) Financial assets
The Company classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value through profit or loss; and
· those to be measured at amortised cost.
The classification depends on the business model for managing the financial
assets and the contracted terms of the cash flows. Financial assets are
classified as at amortised cost only if both of the following criteria are
met:
· the asset is held within a business model whose objective is to collect
contracted cash flows; and
· the contractual terms give rise to cash flows that are solely payments of
principal and interest.
Financial assets, including trade and other receivables and cash and bank
balances, are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the transaction is
measured at the present value of the future receipts discounted at a market
rate of interest.
Such assets are subsequently carried at amortised cost using the effective
interest method.
At the end of each reporting period financial assets measured at amortised
cost are assessed for objective evidence of impairment. If an asset is
impaired the impairment loss is the difference between the carrying amount and
the present value of the estimated cash flows discounted at the asset's
original effective interest rate. The impairment loss is recognised in the
consolidated income statement.
The Company applies the simplified approach in calculating the expected credit
losses (ECLs) as permitted by IFRS 9. Changes in credit risk is not tracked
but instead a loss allowance is recognised at each reporting date based on the
financial asset's lifetime ECL.
If there is a decrease in the impairment loss arising from an event occurring
after the impairment was recognised the impairment is reversed. The reversal
is such that the current carrying amount does not exceed what the carrying
amount would have been had the impairment not previously been recognised. The
impairment reversal is recognised in the consolidated income statement.
Financial assets are derecognised when (a) the contractual rights to the cash
flows from the asset expire or are settled, or (b) substantially all the risks
and rewards of the ownership of the asset are transferred to another party or
(c) despite having retained some significant risks and rewards of ownership,
control of the asset has been transferred to another party who has the
practical ability to unilaterally sell the asset to an unrelated third party
without imposing additional restrictions
ii) Financial liabilities
Basic financial liabilities, being trade and other payables, are initially
recognised at transaction price, unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present
value of the future receipts discounted at a market rate of interest.
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities. Trade payables
are recognised initially at transaction price and subsequently measured at
amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished,
that is when the contractual obligation is discharged, cancelled or expires.
The Company does not hold or issue derivative financial instruments.
iii) Offsetting
Financial assets and liabilities are offset and the net amounts presented in
the financial statements when there is an enforceable right to set off the
recognised amounts and there is an intention to settle on a net basis or to
realise the asset and settle to liability simultaneously.
2.11 Pensions
For defined contribution schemes the amount charged to the statement of
comprehensive income is the contribution payable in the year. Differences
between the contributions payable in the year and contributions actually paid
are shown either as accruals or prepayments.
3 Reverse acquisition
On 14 May 2021 the Company acquired through a share for share exchange the
entire share capital of CBL whose principal activity is the early detection of
lung cancer through the development of tests to detect CIZ1B variant protein.
Although the transaction resulted in CBL becoming a wholly owned subsidiary of
the Company, the transaction constitutes a reverse acquisition as the previous
shareholders of CBL own a substantial majority of the shares of the Company.
In substance the shareholders of CBL acquired a controlling interest in the
Company and the transaction has therefore been accounted for as a reverse
acquisition. As the Company's activities prior to the acquisition were purely
the maintenance of the AIM listing, acquiring CBL and raising equity finance
to provide the required funding for the operations of the acquisition means it
did not meet the definition of a business combination in accordance with IFRS
3.
Accordingly, this reverse acquisition does not constitute a business
combination and was accounted for in accordance with IFRS 2 "Share-based
Payments" and associated IFRIC guidance. Although the reverse acquisition is
not a business combination, the Company has become a legal parent and is
required to apply IFRS 10 and prepare consolidated financial statements. The
directors have prepared these financial statements using the reverse
acquisition methodology, but rather than recognise goodwill, the difference
between the equity value given up by the CBL shareholders is charged to the
statement of comprehensive income as a share-based payment on reverse
acquisition, and represents in substance the cost of acquiring a quoted
company.
In accordance with the reverse acquisition principles, these consolidated
financial statements represent a continuation of the consolidated statements
of Cizzle Biotechnology Holdings Plc and its subsidiaries and include:
- The assets and liabilities of CBL at their pre-acquisition carrying value
amounts and the results for all periods reported; and
- The assets and liabilities of the Company as at 14 May 2021 and its results
from the date of reverse acquisition (14 May 2021 to 31 December 2021).
On 14 May 2021 the Company issued 206,310,903 ordinary shares to acquire the
313,932 ordinary shares of CBL Limited. At 14 May 2021 the valuation of the
investment in CBL was £21,700,000.
Because the legal subsidiary, CBL, was treated on consolidation as the
accounting acquirer and the legal parent company, Cizzle Biotechnology
Holdings Plc, was treated as an accounting subsidiary, the fair value of the
shares deemed to be issued by CBL was calculated at £2,587,000 based on an
assessment of the purchase consideration for a 100% holding of Cizzle
Biotechnology Holdings plc.
The fair value of the net liabilities of Cizzle Biotechnology Holdings Plc at
acquisition was as follows:
£'000
Cash and cash equivalents 46
Other assets 47
Liabilities (310)
Net (Liabilities) (217)
The difference between the deemed cost of £2,587,000 and the fair value of
the net liabilities noted above of £(217,000) resulted in £2,804,000 being
expensed as "reverse acquisition expenses" in accordance with IFRS2, Share-
based Payments, reflecting the economic cost to CBL shareholders of acquiring
a quoted entity.
The reverse acquisition reserve which arose from the reverse takeover is made
up as follows:
£'000
Pre-acquisition equity(1) (22,621)
CBL share capital at acquisition(2) 1,599
Investment in CBL(3) (21,803)
Reverse acquisition expense(4) 2,804
(40,021)
1. Pre-acquisition equity of Cizzle Biotechnology Holdings PLC at 14 May
2021.
2. CBL had issued share capital and share premium of £1,599,000. As
these financial statements represent the capital structure of the legal parent
entity, the equity of CBL is eliminated.
3. The value of the shares issued by the Company in exchange for the
entire share capital of CBL plus stamp duty expenses.
4. The reverse acquisition expense represents the difference between the
value of the equity issued by the Company, and the deemed consideration given
by CBL to the Group.
4 Financial risk
The Group's principal risk factors are as follows:
4.1 Capital risk management
The Company monitors capital which comprises all components of equity (i.e.
share capital, share premium, capital reduction reserve, share option reserve,
and retained earnings/losses). Note 22 describes how capital is managed in
respect of the debt to equity ratio.
4.2 Financial risk factors
The Group's operations exposed it to a variety of financial risks that had
included the effects of credit risk, liquidity risk and interest rate risk.
The Company had in place a risk management programme that attempted to limit
the adverse effects on the financial performance of the Company by monitoring
levels of debt finance and the related finance costs. The Company did not use
derivative financial instruments to manage interest rate costs and as such, no
hedge accounting was applied.
Given the size of the Company, the directors did not delegate the
responsibility of monitoring financial risk management to a sub-committee of
the Board. The policies set by the board of directors were implemented by
the Company's finance department.
(a) Credit risk
The Company's credit risk was primarily attributable
to its trade receivables balance. The amounts presented in the statement of
financial position are net of allowances for impairment.
(b) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting
obligations associated with financial liabilities. The Company's financial
liabilities included its trade and other payables shown in Note 15. The Group
manages this risk through the preparation of cash flow forecasts which are
regularly reviewed by the directors.
5 Critical accounting estimates and judgements
In the preparation of the financial statements the directors must make
estimates and assumptions that affect the asset and liability items and
revenue and expense amounts recorded in the financial statements. These
estimates are based on historical experience and various other assumptions
that the Board believes are reasonable under the circumstances. The results of
this form the basis for making judgements about the carrying value of assets
and liabilities that are not readily available from other sources.
a) Accounting judgement
The Group's principal judgements relate to its impairment review of its's
intangible assets (AZD 1656), the Company's investment in its subsidiary
company, CBL. Following the review of these assets at 31 December 2022 the
directors considered that no impairments of these assets had arisen. The
directors also consider that the Group's intangible assets currently have an
indefinite life, as mentioned in Note 2.5.
b) Accounting estimate
Share based payments
See Note 14 which explains the methods used to estimate the fair value of
share options granted.
6 Operating expenses
Group Group
2022 2021
£'000 £'000
Research and development 280 161
Professional advisers 180 89
Staff costs 154 88
Intellectual property renewal fees 38 57
Regulatory fees 68 53
Share based payment 8 37
Audit fees (Note 7) 31 27
Other expenditure 64 40
On-going administrative costs 823 552
Share option charge 140 299
Reverse acquisition expense - 2,804
Transaction costs - IPO and reverse acquisition - 303
Total administrative expenses 963 3,958
7 Auditor's remuneration
Group Group
2022 2021
£'000 £'000
Fees payable to the Company's auditor for the audit of the Group, Company and 31 27
subsidiary financial statements
Non-audit services - reporting accountant for IPO - 38
31 65
8 Directors' emoluments
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Wages and salaries 300 125 143 105
Social Security Costs 39 10 17 11
Pension Contributions 5 3 3 2
Share based payments 140 299 140 299
484 437 303 417
The Group does not have any employees other than the directors. The average
number of directors during the year was 4 (2021: 4).
9 Income tax credit
The tax credit for the year was as follows:
Group Group
2022 2021
£'000 £'000
Research and development tax credits
- Current year (47) (37)
- Prior year (4) -
(51) (37)
Research and Development tax credits are accounted for on an accruals basis.
The tax on the Group's loss before tax differs from the theoretical amount
that would arise using the tax rate applicable to the losses of the Group as
follows:
Group Group
2022 2021
£'000 £'000
Loss before tax on continuing operations (963) (3,958)
Tax calculated at the domestic rate applicable of 19% (2021: 19%) (183) (752)
Expenses not deductible for tax purposes 27 590
Tax losses for which no deferred tax credit was recognised 156 162
Research and development tax credit (51) (37)
Total income tax credit (51) (37)
10 Earnings per share
Basic loss per share
Group Group
2022 2021
Loss for the year (912,000) (£3,921,000)
Weighted average number of ordinary shares 291,322,970 160,516,450
Basic loss per share (0.3p) (2.4p)
The basic loss per share is derived by dividing the loss for the period
attributable to ordinary shareholders by the weighted average number of shares
in issue. In 2021 the weighted average number of shares is adjusted for the
impact of the reverse acquisition as follows:
- Prior to the reverse acquisition, the number of shares is based on CBL,
adjusted using the share exchange ratio arising on the reverse acquisition;
and
- From the date of the reverse acquisition, the number of share is based on the
Company.
Diluted earnings per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding after adjusting these amounts for the effects of dilutive
potential ordinary shares. As the results for the years ended 31 December 2022
and 31 December 2021 are a loss, any exercise of share options would have an
anti-dilutive effect on earnings per share. Consequently, earnings per share
and diluted earnings per share are the same and the calculation has not been
included.
As at 31 December 2022, there were share options outstanding over 19,742,945
shares (2021: 23,432,041 shares), which could potentially have a dilutive
impact in the future.
11 Non- Current assets
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Investment in subsidiary undertakings - - 21,803 21,803
Intangible assets 2,080 200 2,080 200
Total investments 2,080 200 23,883 22,003
a. Investments in subsidiary undertakings - Company
2022 2021
£'000 £'000
Opening balance 21,803 -
Acquisition during the year - 21,803
Closing balance 21,803 21,803
The investment in subsidiary undertakings is in the following companies:
Name Country of incorporation Proportion of ownership interest Principal activities/status
Cizzle Biotechnology Limited England and Wales 100% interest in ordinary share capital Early detection of lung cancer
Cizzle Biotech Limited (formerly Enfis Limited) England and Wales 100% interest in ordinary share capital Dormant
The registered address for ongoing subsidiaries is 6(th) floor, 60 Gracechurch
Street, London, EC3V 0HR.
Cizzle Biotechnology Limited - as mentioned in Note 3, this investment
represents the value of the shares issued by the Company in exchange for the
entire share capital of CBL (£21,700,000 plus stamp duty expenses of
£103,000).
b. Intangible assets - Group and Company
2022 2021
£'000 £'000
Opening balance 200 -
Acquisition during the year 1,880 200
Closing balance 2,080 200
At 1 January 2022, Intangible assets represents the fair value of an
investment in a royalty sharing arrangement with St George Street Capital
("SGSC"), a UK-based medical charity. This agreement grants the Company
potential future royalty payments from the commercialisation of St George
Street's therapeutic asset AZD1656 of up to £5m, plus potentially further
payments from the use of a companion diagnostic.
On 14 February 2022, the Company entered into a definitive agreement (the
"Agreement") with Conduit Pharmaceuticals Limited ("Conduit") and St George
Street Capital Limited ("SGSC") to acquire a 5% economic interest in the
commercialisation of the AZD 1656 asset or other such assets being developed
by Conduit or SGSC to treat inflammatory pulmonary and cardiovascular disease
(the "Economic Interest").
Highlights of the Agreement are as follows:
- Agreement with Conduit and SGSC to acquire a 5% economic interest for a total
consideration of £1.88 million, to be settled in new Cizzle ordinary shares
at a price of 4.0p per share, a 56.9% premium to the closing mid-market price
on 11 February 2022;
- The Agreement is in addition to the Company's existing interest in AZD 1656 as
announced on 20 September 2021:
- SGSC recently reported the successful completion of the AZD 1656 ARCADIA
clinical trial in Covid-19 and SGSC and Conduit are in discussions with
multiple pharmaceutical companies about licensing opportunities for AZD 1656
for Covid-19 and potentially for further indications; and
- The Agreement supports the Company's ambitions to expand its target customer
base into the pharmaceutical industry and is in line with its strategy of
building a portfolio of early cancer detection tests, companion diagnostics
and royalty bearing stakes in significant drug assets.
Consideration for the Agreement (£1.88m) - non cash acquisition
Under the terms of the Agreement, Cizzle will pay consideration of £1.88
million to SGS for the Economic Interest. Of the consideration payable, £1.0
million (the "Initial Consideration") was satisfied by the issue of 25,000,000
new ordinary shares in the Company (the "Consideration Shares"), at a price of
4.0 pence per Consideration Share, being a premium of 56.9 per cent. to the
Company's closing mid-market price of 2.55 pence on 11 February 2022. The
remaining consideration of £880,000 was settled in new ordinary shares in the
Company issued at 4.0 pence per share, on 29 September 2022.
Consideration for Put Options (£0.12m)
On 19 December 2022 the Company agreed a put option to sell: (i) its 5%
economic interest in the commercialisation of the AZD 1656 asset to treat
inflammatory pulmonary and cardiovascular disease (the "Economic Interest");
and (ii) its royalty sharing agreement with St George Street Capital ("SGSC"),
the UK-based biomedical charity (the "Royalty Sharing Agreement') to Conduit
Pharmaceuticals Limited ("Conduit") for a total consideration of £3.25
million to be satisfied through the issuance of new shares in Conduit (the
"Option"). The Economic Interest and Royalty Sharing Agreement are valued at
cost, totalling £2,080,000. No profits or revenues were attributable to the
assets subject to the Option. The Option is exercisable solely at the
discretion of Cizzle and Cizzle has agreed to pay Conduit £120,000 in cash as
the premium for the Option, which has a nine-month term. The Company also
raised proceeds of £115,586, net of expenses, by way of a subscription for
7,371,557 new ordinary shares in the Company ("Ordinary Shares") at 1.6p per
share (the "Issue Price") with existing investors (the "Subscription"), in
order to provide funds to be put towards satisfying the Option premium.
This Put Option was paid for in cash and is accounted for under prepayments (
see Note 12).
12 Trade and other receivables
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade receivables - - - -
Less: provision for impairment - - - -
Trade receivables (net) - - - -
Amounts due from subsidiaries - - 590 216
Social security and other taxes 7 14 7 7
Corporation tax recoverable 88 37 - -
Prepayments and other receivables 132 29 128 18
227 80 725 241
Trade and other receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
classified as 'trade and other receivables' in the statement of financial
position and are included in current assets, except for maturities greater
than 12 months after the statement of financial position date. These are
classified as non-current assets. The value of trade receivables shown above,
in addition to the value of cash balances on deposit with counterparties (see
Note 16), represents the Company's maximum exposure to credit risk. No
collateral is held as security.
Prepayments include £120,000 (2021: £nil) for a Put Option that was acquired
during the year and paid in cash. See Note 11 for further details.
Amounts due from subsidiary undertakings at 31 December 2022 represented net
amounts provided to the Company's wholly owned subsidiary, Cizzle
Biotechnology Limited.
The fair value of trade and other receivables approximate to the net book
values stated above.
As of 31 December 2022, trade and other receivables of £Nil (2021: £Nil)
were impaired.
13 Cash and cash equivalents
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Cash on hand and balances with banks 478 875 464 848
478 875 464 848
14 Share capital
Numbers in 000s
New Deferred 'A' shares Deferred 'A' shares
Ordinary
Nominal value per share Shares 0.01p 0.99p
0.01p
At 1 January 2022 253,448 225,158 12,383,626
Issued 86,356 - -
At 31 December 2022 339,804 225,158 12,383,626
The above table reflects the full authorised shares of the Company at 31
December 2022. In addition to this the directors had authorised the issue of
7,371,557 new ordinary shares of 0.01p each but these shares were not issued
until 5 January 2023 when they had been approved by the London Stock Exchange
for issue.
The following table reconciles the total nominal value of the shares in issue:
New Ordinary shares Deferred Deferred 'A' shares
£0.01p
'A' shares
Nominal value per share 0.01p 0.01p 0.99p Total
£000 £'000 £000 £000
At 1 January 2022 26 1,238 2,229 3,493
Issued during the year
9 - - 9
At 31 December 2022 35 1,238 2,229 3,502
During the year ended 31 December 2022, the following shares were issued:
No of shares Issue price
issued per share
000s Pence
17 Feb 2022 - Acquisition of AZD1656 Intangible Asset 25,000 4.0p
26 Sept 2022 -Placing (cash) 35,667 1.5p
29 Sept 2022 - balance of acquisition of AZD1656 Intangible asset 22,000 4.0p
29 Sept 2022 - exercise of share options 3,689 1.53393p
Total issued 86,356
On 14 May 2021 the Company issued investor warrants to subscribe for
11,000,000 Ordinary Shares at a fixed price of 15p per share valid for three
years until 13 May 2024.
On 14 May 2021 the Company issued broker and adviser warrants to subscribe for
1,350,000 Ordinary Shares at a fixed price of 10p per share valid for three
years until 13 May 2024. 250,000 of these broker warrants are automatically
exercisable upon the Company's share price equalling 20p per share. The fair
value of these warrants at 31 December 2021 was £36,000 and has been
accounted for as a cost to the Company and a reduction of the share premium
account ( see statement of changes in equity on pages 42 to 43).
Employee share scheme
The Company has an Executive Share Option Scheme.
The exercise terms of all granted options as at 31 December 2022 are
summarised below:
Date of grant Number of options Exercise price (pence per share) Exercise
dates from
2015 300 5.02 2017
2016 800 1.85 2017
2017 500 1.00 2018
2021 3,689,096 1.53 2021
2021 19,741,345 10.00 2021 (based on performance)
The number and weighted average exercise price of the options that were
exercisable at 31 December 2022 were 19,741,345 and 10.0p respectively.
Movements in the number of share options outstanding and their related
weighted average exercise prices are as follows:
Average
exercise price Options
(pence per share) number
At 31 December 2021 8.67 23,432,041
Exercised during year 1.53 (3,689,096)
At 31 December 2022 10.00 19,742,945
Share options outstanding at the end of the year have the following expiry
dates and exercise prices:
Exercise price Options
Expiry date (pence per share) 2022
2025 5.02 300
2026 1.85 800
2027 1.00 500
2031 10.00 19,741,345
19,742,945
The Company determines the fair value of its share option contracts on the
grant date, adjusts this to reflect its expectation of the options that will
ultimately vest, and then expenses the calculated balance on a straight-line
basis through its statement of comprehensive income over the expected vesting
period with a corresponding credit to its share option reserve. Subsequent
changes to the expectation of number of options that will ultimately vest are
dealt with prospectively such that the cumulative amount charged to the
statement of comprehensive income is consistent with latest expectations.
Subsequent changes in market conditions do not impact the amount charged to
the statement of comprehensive income.
The Company determines the fair value of its share option contracts using a
model based on the Black-Scholes-Merton methodology. In determining the fair
value of its share option contracts, the Company made the following
assumptions (ranges are provided where values differ across tranches).
Expected volatility was determined by reference to historical volatility of
the Company's share price.
Grant date Share Exercise Expected Expected Risk free Fair Value
Price Price Option Expected Dividend Interest At date of
Pence Pence Life Volatility Yield Rate Grant
Years % % % Pence
2021 9.38p 1.53p 10 years 68% 0% 0.83% 1.60p
2021 4.40p 10.00p 10 years 32% 0% 0.83% 3.00p
15 Trade and other payables
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade payables 41 111 40 73
Social security and other taxes 8 43 8 6
Accruals and other payables 96 64 78 54
145 218 126 133
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Due or due in less than one month 16 75 15 37
Due between one and three months 25 4 25 4
Due in more than three months - 32 - 32
41 111 40 73
16 Financial assets and liabilities
The tables below analyse the carrying value of financial assets and financial
liabilities in the Group's and Company's statements of financial position.
Further information on the classes that make up each category is provided in
the notes indicated. The carrying value of each category is considered a
reasonable approximation of its fair value. All amounts are due within one
year.
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade receivables (Note 12) - - - -
Amounts due from subsidiaries (Note 12) - - 590 216
Prepayments and other receivables (Note 12) 132 29 128 18
Cash and cash equivalents (Note 13) 478 875 464 848
Financial assets at amortised cost 610 904 1,182 1,082
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade payables (Note 15) 41 111 40 73
Accruals and other payables (Note 15) 96 64 78 54
Borrowings (Note 16) - - - -
Financial liabilities at amortised cost 137 175 118 127
17 Deferred income tax
There is an un-provided deferred tax asset arising on taxable losses of
£0.64m (2021: £0.47m). In accordance with accounting standards, the deferred
tax asset has not been recognised in the financial statements due to
uncertainty over the availability of sufficient future profits against which
it could be recovered.
At 31 December 2022 there was no deferred tax liability (2021: £Nil).
18 Commitments
The Group has no commitments as at 31 December 2022 (2021: £Nil).
19 Related party transactions
Transactions with directors
At 31 December 2022 there was a balance owed to the Company by Professor Dawn
Coverley, a director of the Company, of £680 in respect of PAYE/NI arising on
the exercise of share options. This amount was fully settled in January 2023.
The maximum liability owed to the Company during the year was £2,582.
20 Controlling party
The directors consider there to be no ultimate controlling party.
21 Capital management
In managing its capital structure, the Company's objective is to safeguard the
Company's ability to continue as a going concern, managing cash flows so that
it can continue to provide returns for shareholders.
The Company makes adjustments to its capital structure in the light of changes
in economic conditions and the requirements of the Company's businesses. The
Board has sought to maintain low levels of borrowing to reflect the
development stage of the Company's businesses. Over time as the Company's
businesses mature and become profitable the Board is likely to make increased
use of borrowing facilities to fund working capital. In order to maintain or
adjust the capital structure, the Company may issue new shares or seek
additional borrowing facilities. The Company monitors capital on several bases
including the debt to equity ratio. This ratio is calculated as debt ÷
equity. Debt is calculated as total borrowings as shown in the consolidated
statement of financial position.
Equity comprises all components of equity as shown in the consolidated
statement of financial position. The debt-to-equity ratio at 31 December 2022
and 31 December 2021 was as follows:
Group Group Company Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Total debt - - - -
Total equity 2,640 937 24,947 22,959
Debt-to-equity ratio 0.0% 0.0% 0.0% 0.0%
22 Reserves
The following reserves describe the nature and purpose of each reserve within
equity:
a. Capital reduction reserve
The capital reduction reserve set out in the Statement of Changes in Equity
arose in 2014 when the nominal value of each share was reduced from 10p to 1p.
b. Share premium
The amount subscribed for each share in excess of nominal value.
c. Reverse acquisition reserve
The reverse acquisition reserve is explained in Note 3.
d. Share option
The accumulated expense arising during their vesting period of share options
granted to directors and employees and warrants granted to third parties.
e. Accumulated losses
All other net losses and gains not recognised elsewhere.
23 Subsequent events
a) Issue of equity
On 5 January 2023 the Company issued 7,371,557 ordinary shares of 0.01p each
for a price of 1.6p per share to fund the purchase of a Put Option to dispose
of AZD1656 assets referred to in Note 11. At 31 December 2022 the Company had
received £115,000 ( net of share issue costs) in relation to this share issue
(gross proceeds: £118,000).
b) Issue of options in lieu of salary increases
In conducting a review of director remuneration, the Company's remuneration
committee was of the view that the Company's directors' salaries are currently
below market comparables. However, even in a period of high inflation, the
directors remain fully committed to maintaining low overheads and maximising
the funds available to the Company for the development of its CIZ1B early lung
cancer test.
The directors have therefore agreed to waive any increase in basic salary for
a period of two years from 3 March 2023. In compensation, and subject to
shareholder approval at the next Annual General Meeting of the Company, the
Company has conditionally granted share options over new ordinary shares in
the Company (the "Options") to the directors, with an exercise price
equivalent to the volume weighted average price of the Company's ordinary
shares for the month of February 2023 at 2.19376p per share. 50% of the
Options will vest and become exercisable after the 12-month anniversary of
grant; the remaining 50% shall vest and become exercisable on the 24-month
anniversary of grant. The Options will have a 10 year life from the date of
grant and are subject to good and bad leaver provisions. The Options are
unapproved for the purposes of the enterprise management incentive and have
been granted outside of, and in addition to, grants made under the Company's
existing share option schemes. Following the grant of the Options, the total
number of ordinary shares under option is 48,685,443 ordinary shares
representing 14.02% of the Company's current issued ordinary share capital.
The Options have been granted to the directors as follows:
Director Number of Options Existing options held Total number of options now held Total number of options now held as % of current issued share capital
granted
Allan Syms 8,868,096 5,068,956 13,937,052 4.01%
Nigel Lee 6,224,233 2,000,000 8,224,233 2.37%
Dawn Coverley 7,614,540 12,672,389 20,286,929 5.84%
John Treacy 6,235,629 - 6,235,629 1.80%
c) Research and development contract
On 24 April 2023 the Group announced a further extension of its research and
development contract with the University of York until 25 September 2024.
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. END FR SESFWMEDSEILRecent news on Cizzle Biotechnology Holdings
See all newsREG - Cizzle Biotechnology - Final results for the year ended 31 December 2024
AnnouncementREG - Cizzle Biotechnology - Contract in Caribbean and Update on CIZ1B
AnnouncementRCS - Cizzle Biotechnology - Launch of New Website
AnnouncementREG - Cizzle Biotechnology - Appointment of Non-Executive Director
AnnouncementREG - Cizzle Biotechnology - Update on Launch of CIZ1B Biomarker Assay
Announcement